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Individual Disputes Excise Tax Increases, Penalties in Tax Court

 

MAR. 5, 2021

Danny Sikkens v. Commissioner

DATED MAR. 5, 2021
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Danny Sikkens v. Commissioner

[Editor's Note:

The exhibits can be viewed in the PDF version of the document.

]

DANNY SIKKENS,
Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent.

UNITED STATES TAX COURT

PETITION

(1) Petitioner hereby petitions the Court for redetermination of the tax deficiencies and penalties for the 2017 and 2018 tax years as set forth in the Notice of Deficiency dated January 6, 2021, A COPY OF WHICH IS ATTACHED. (See Exhibit A.) The Notice of Deficiency was issued by the Office of the Internal Revenue Service at Dallas, Texas.

(2) Petitioner is an individual taxpayer with the mailing address of 500 E 1st Street, Newberg, Oregon 97132.

(3) Petitioner requests the case be conducted under regular tax case procedures.

(4) The alleged deficiencies, as determined by the Commissioner, is in excise tax, interest, and penalties, as well as penalties under §6651 of the Internal Revenue Code of 1986, as amended ("Code"). The Commissioner has established the following alleged deficiencies for the 2017 of which the excise tax, penalties, and interest are in dispute.   

Tax Year Ended:

Amount of deficiency disputed (including penalty and interest)

2017

$ 7,638.07 (§4958(a)(1))

$ 61,104.54 (§4958(b))

$1,718.57 (§6651(a)(1) penalty)

1,069.33 (§6651(a)(2) penalty)

2018

$ 685.02 (§4958(a)(1))

$5,480.18(§4958(b))

685.02 (§6651(a)(1) penalty)

54.80 (§6651(a)(2) penalty)

(5) The Commissioner's determination of excise tax, interest and penalties as set forth in the Notice of Deficiency was based upon the following errors:

(a) Erroneously and wrongfully increasing first-tier excise taxes based on deemed excess benefit transactions of $30,552.27 for the 2017 tax year.

(b) Erroneously and wrongfully increasing second-tier excise taxes on deemed excess benefit transactions of $30,552.27 for the 2017 tax year.

(c) Erroneously and wrongfully increasing first-tier excise taxes based on deemed excess benefit transactions of $2,740.09 for the 2018 tax year.

(d) Erroneously and wrongfully increasing second-tier excise taxes on deemed excess benefit transactions of $2,740.09 for the 2018 tax year.

(e) Alternatively, erroneously and wrongfully imposing the failure to file a tax return penalty pursuant to §6651(a)(1) of the Code for the 2017 and 2018 tax years.

(f) Alternatively, erroneously and wrongfully imposing the failure to pay taxes show on a tax return penalty pursuant to §6651(a)(2) of the Code for the 2017 and 2018 tax years.

(g) Erroneously and wrongfully imposing penalties pursuant to §§6651(a)(1) and 6651(a)(2) of the Code for the 2017 and 2018 tax years, due to failure to file a tax return or failure to pay taxes show on a tax return, without prior managerial approval of the penalties.

(6) The facts upon which Petitioner relies as the basis of his case are as follows:

(a) Petitioner correctly and accurately reported all taxable income during the 2017 and 2018 tax years. Deemed excess benefit transactions (first-tier excise tax) reported for unapproved expenses related to an exempt-organization are in error. Petitioner received no such taxable benefits. Petitioner's books and records do not reflect the increase in excess benefit transactions.

(b) Petitioner correctly and accurately reported all taxable income during the 2017 and 2018 tax years. Deemed excess benefit transactions (second-tier excise tax) reported for unapproved expenses related to an exempt-organization are in error. Petitioner received no such taxable benefits. Petitioner's books and records do not reflect the increase in excess benefit transactions.

(c) Petitioner has at all times acted in good faith in connection with his tax affairs. Therefore, the claim for penalties under §6651(a)(1) due to failure to file a tax return for the 2017 and 2018 tax years is misplaced.

(d) Petitioners have at all times acted in good faith in connection with his tax affairs. Therefore, the claim for penalties under §6651(a)(2) due to failure to pay taxes show on a tax return for the 2017 and 2018 tax years is misplaced.

(e) Erroneously and wrongfully failing to approve penalties under §§6651(a)(1) and 6651(a) before the issuance of the underlying tax assessments via Letter 3614 (or other communication alerting the Petitioner of the tax assessments communication). Therefore, the assessment of any penalties under §§6651(a)(1) and 6651(a)for the 2017 and 2018 tax years is misplaced.

(f) On oath and affirmation, and under penalties of perjury, the Petitioner states that he does not owe the additional tax alleged to be due by the Commissioner for the 2017 and 2018 tax years.

WHEREFORE, Petitioner prays:

(1) The Court may hear the case and correct the Commissioner's assessments for the 2017 and 2018 tax years;

(2) The Court may determine that there are no deficiencies due from the Petitioner for the 2017 and 2018 tax years;

(3) Determine that Petitioner is not liable for any additions to excise tax, interest, or penalties with respect to the 2017 and 2018 tax years;

(4) Determine that Petitioners are not liable for any additions to tax under IRC §§6651(a)(1) and 6651(a)(2) or any other sections of the Code for the 2017 and 2018 tax years; and

(5) The Court grant such other and further relief as may be appropriate.

DATED this the 16th day of February, 2021.

Respectfully submitted,

Dale R. Kennedy-Attorney at Laws
345 Lincoln Street, SE
Salem, Oregon 97302
(503) 559-9975
(888) 957-0873 Facsimile

Dale R. Kennedy
Oregon Bar No. 973037
Tax Court Bar No. KD0441

E-mail: dale@kennedytaxsolutions.com

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